3 Big Changes for Women Entrepreneurs and Federal Contracts

Recent legislative changes to the federal Woman Owned Small Business (WOSB) certification continue to shape the future for opportunities for women-owned businesses in federal procurement.

There is still one major issue to be resolved—and it could have a major impact on how companies are certified as WOSBs.

The Story So Far

First, a quick government history lesson. In 1994, the Federal Acquisition Streamlining Act established a 5 percent procurement goal with woman-owned small businesses, but without a mechanism to help contracting offices meet this goal.

A few years later, in 2000, Congress passed the Equity in Contracting for Women Act, allowing federal agencies to limit certain procurements for woman-owned businesses—to create set-asides for certain projects. In 2010, SBA issued the final rule for the implementation of this WOSB program, called 8(m), and it went live in early 2011.

The 8(m) program allowed a qualifying business owner the choice between self-certifying (uploading required documents to a repository) or to be certified by one of four third-party fee-based certifiers. Once certified, a WOSB was eligible to bid on set-aside procurements in certain industries. Economically disadvantaged women-owned small businesses (EDWOSBs) were also certified in this program with additional qualifying financial documents.

It has been a struggle for contracting offices to reach the 5 percent WOSB goal set back in 1994. They finally hit this target in 2015, but there is still more work to do.

3 Big Changes

With the National Defense Authorization Act of 2015 (NDAA), Congress enacted new legislation amending the WOSB program. The act gives government buyers additional ways to buy from WOSBs, while reducing the risk of fraud.

Language in the act states that …

» Contracting offices have the authority to award sole-source contracts to WOSBs. That is, a contracting office isn’t required to seek bids for a job if there is only one company that has the ability to provide the services or goods in question at a fair and reasonable price.

In September 2015, SBA published a final rule in the Federal Register to implement sole-source authority.

» The government shortened the time period required to re-evaluate which industries (NAICS) are underrepresented by women.

As a result, more WOSBs can now qualify for set-asides.

In the original 2011 WOSB program, 330 NAICS industry codes were eligible for contracts, and 60 percent of these were identified only for EDWOSB set-asides. There are now 445 NAICS available, with 82 percent of the total WOSBs eligible, a shift that now
favors WOSBs.

» WOSBs and EDWOSBs must be certified by a federal agency, a state government, the SBA or a national certifying entity approved by SBA.

This clearly eliminates self-certification as an option. But the change itself is still making its way through the regulatory process.

The SBA announced the certification requirement portion of the NDAA
would be implemented through a separate rule-making. In mid-December, SBA issued a request for public comment on how to structure the new certification process. Comments closed on Feb. 16, and any final rulemaking is pending. At this time, SBA is still accepting self-certifications.

Getting the certification process right is critical to the success of the WOSB effort.

Formal certifications help prevent fraud, but the cost to implement a structured program may be cost-prohibitive, given the amount of resources it would take to certify the thousands of women- owned businesses that are currently self-certified.

With any luck, a better solution will be announced soon. Ideally, the result will be a no-fee program with an easy application process for WOSBs, a system where the SBA can monitor and measure compliance effectively, and contracting offices can quickly identify eligible WOSBs and EDWOSBs to meet their 5 percent goal.